Guide for Buying a Property in Sri Lanka

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Sri Lanka formerly known as Ceylon is an island country lying in the Indian Ocean and separated from peninsular India by the Palk Strait. Proximity to the Indian subcontinent has facilitated close cultural interaction between Sri Lanka and India from ancient times. At a crossroads of maritime routes traversing the Indian Ocean, Sri Lanka has also been exposed to cultural influences from other Asian civilizations. Ancient Greek geographers called it Taprobane. Arabs referred to it as Serendib. Later European mapmakers called it Ceylon, a name still used occasionally for trade purposes. It officially became Sri Lanka in 1972.

The buying process in Sri Lanka is not very different from many other countries. But the most important part about the buying process is to engage an independent lawyer or notary you can trust. As in almost every other country, the buying process cannot be completed without a lawyer or notary. If you are planning to buy property you should choose the one you can trust and if you are a foreigner, find a lawyer who speaks English, as well as the native language of the seller, in order to avoid communication problems or problems with the contract.

Finding a property can be quite hard since people from Sri Lanka often do not advertise what they sell but due to technological advances, there are online websites like Ceylon Property – where you can find all the latest properties for sale or rent in Sri Lanka. Also, there are real estate agents that can find you the ideal property. Real estate agents in Sri Lanka are not licensed so check their reputation and talk to other ex-pats or locals who have experience in buying property. Sometimes they charge a commission from both sides: buyer and seller. Try to negotiate and agree on a commission before you sign anything.

Negotiating the Price and Legal Checks

Having found the house or property of your dreams you should make an offer to the seller or negotiate the price. Be prepared for a lot of bargaining. Sri Lankans often raise the price tremendously when selling to a foreigner.

Your lawyer will check the deeds and the plan of property at the Land Registry to ensure that the seller is the only and legal owner. Further checks should be made for eventual debts or leasing agreements. 

If there are some ambiguities and you still want to buy it, you should buy a title insurance to protect you from any future claims to the land. Usually the ownership should be clear though (and it may not be the best plan to buy it if there are doubts).

Signing the Contract

If both parties agree on a price, the lawyer sets up a contract that seller and buyer have to sign. In the case that there are more owners each of them has to sign the contract. You usually pay a deposit of 10% of the whole price afterwards if you can’t pay all at once. Having signed the contract you need to pay a service tax to the local authority. It is about Rs400 – Rs5,000 (€2 – €30) and has to be paid every year.

After that, the seller needs to get a building and street line certificate from the municipality as well as a non-vesting and ownership proof. He also needs tax receipts for proof of payment of rates and taxes for the last quarter as well as the certificate of conformity in respect of the building.

Then the seller has to request an updated survey plan that has to be attached when applying for the registration later.

After finishing the deed of transfer, the stamp duty (around 3% – 4%) has to be paid at a nominated bank within seven days in favour of the responsible Provincial Council.

Finally the lawyer/ notary has to register the deed at the Land Registry and the new owner at the municipality. You receive a certificate of ownership. No deal is closed and legal until the new owner is registered.

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